Boeing factory employees gather on a picket line in the course of the first day of a strike near the doorway of a production facility in Renton, Washington, U.S., September 13, 2024.
Matt Mills Mcknight | Reuters
RENTON, Wash. — Money-strapped Boeing is facing mounting costs from an ongoing machinist strike as employees push for higher pay. A failure to get a deal done may very well be even dearer.
Within the shadow of a factory outside Seattle where Boeing makes its best-selling planes, picketing Boeing machinists told CNBC they’ve saved up money and have taken or are considering taking side jobs in landscaping, furniture moving or warehouse work to make ends meet if the strike is goes on for much longer.
The work stoppage by Boeing’s factory employees within the Pacific Northwest just entered its second week. The financial cost of the strike on Boeing is determined by how long it lasts, though rankings agencies have warned that the corporate could face a downgrade if it drags on too long.
That will add to the borrowing costs of the corporate, already $60 billion in debt. Boeing has burned through about $8 billion to this point this yr within the wake of a near-catastrophic door plug blowout from certainly one of its 737 Max planes in January.
Boeing hasn’t turned an annual profit since 2018, and its recent CEO Kelly Ortberg is attempting to restore the corporate’s popularity after months of producing crises which have slowed deliveries to customers, depriving it of money.
Boeing 737 Max planes sit on the airport in Renton, Washington.
Leslie Josephs | CNBC
On the local union office in Renton, machinists were preparing for what may grow to be a lengthy strike: Union members carried in large pallets of bottled water, while someone mixed a large tuna salad within the kitchen to make sandwiches for employees. Union vans visited demonstration sites around Renton offering transportation to rest room breaks for employees on picket duty. Burn barrels provided heat for cold overnight pickets.
Many employees spoke of their love for his or her jobs but fretted in regards to the high cost of living within the Seattle area, where nearly all of Boeing’s aircraft are made.
The median home price in Washington state increased about 142% to $613,000 as of 2023, from $253,800 a decade earlier, in keeping with the state’s Office of Financial Management. That outpaces the roughly 55% increase nationally over that period, in keeping with data from the Federal Reserve Bank of St. Louis.
“We will not afford [to own] a house,” said Jake Meyer, a Boeing mechanic who said he’ll start driving for a food delivery service in the course of the strike and is picking up odd jobs akin to moving furniture. Meyer said although he’s striking for higher pay from Boeing, he enjoys the job of constructing airplanes.
“I take pride in my work,” he said.
One other Boeing machinist said he has been saving for months, forgoing things akin to restaurants and paying three months of mortgage payments early.
“I can last so long as it takes,” said the employee, who spoke on the condition of anonymity.
$50 million a day
Greater than 30,000 Boeing machinists walked off the job at midnight Sept. 13 after turning down a tentative labor deal in an almost 95% vote — 96% voted in favor of a strike. They received their last paychecks Thursday, and health advantages are set to finish on Sept. 30. A strike fund from the union will soon give them $250 per week.
The strike is costing Boeing some $50 million a day, in keeping with estimates by Bank of America aerospace analyst Ron Epstein. The strike halted production of most of Boeing’s aircraft, and that’s rippling out to the aerospace giant’s vast network of suppliers, a few of which have already been told to halt shipments. Boeing remains to be making 787 Dreamliners at its non-union factory in South Carolina.
Boeing Machinists union members count votes to just accept or reject a proposed contract between Boeing and union leaders and whether or to not strike if the contract is rejected, on the Aerospace Machinists Union Hall in Seattle, Washington, on September 12, 2024.
Jason Redmond | AFP | Getty Images
The battle pits a struggling Boeing against a workforce looking for wage increases and other improvements. Boeing’s most up-to-date offer included 25% general wage increases over a four-year deal and was endorsed by the machinists union, the International Association of Machinists and Aerospace Employees District 751.
Employees said they were searching for wage increases closer to the 40% that the union had proposed in addition to annual bonuses and a restoration of pensions lost greater than a decade ago.
Boeing and the union were on the negotiation table this week, but each Boeing and union negotiators have said they were dissatisfied with the dearth of progress.
“We proceed to prioritize the problems you defined in essentially the most recent survey,” union negotiators wrote to members Wednesday, “yet we’re deeply concerned that the corporate has not addressed your top concerns. No meaningful progress was made during today’s talks.”
Ortberg, who’s just six weeks on the job, announced temporary furloughs this week of tens of hundreds of Boeing staff, including managers and executives, on the heels of a hiring freeze and other cost-cutting measures announced this week.
“During mediation with the union this week, we continued our good faith efforts to have interaction the union’s bargaining committee in meaningful negotiations to handle the feedback we have heard from our team,” Ortberg said in a note to staff Friday.
“While we’re dissatisfied the discussions didn’t result in more progress, we remain very committed to reaching an agreement as soon as possible that recognizes the labor of our employees and ends the work stoppage within the Pacific Northwest,” Ortberg wrote.
The strike, which incorporates Boeing machinists within the Seattle area, Oregon and a couple of other locations, is just the most recent in a series of labor battles lately that has included actors, autoworkers, port employees and airline employees, all of which have won raises after strikes or strike threats.
The Biden administration has encouraged Boeing and the union to achieve a deal.
“I do consider that each parties need to get to a resolution here, and hoping to see one which is sensible for the employees and it really works for a corporation that actually needs to search out its way forward on so many fronts,” Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday.
Tight labor market
Boeing is facing a decent labor market. In the course of the last strike, in 2008, which lasted lower than two months, the corporate was in higher financial shape, and there was less job competition in the world.
One Boeing supplier told CNBC that furloughing or shedding employees would cause problems for months down the road since it takes so long to coach staff on such technical and detailed work.
In the course of the pandemic, Boeing and its suppliers shed hundreds of employees. They’ve since struggled to rent and train employees in time for the resurgence in air travel and aircraft demand.
“You are in an environment where expert, technical labor is tough to get immediately, particularly in aerospace and defense,” said Bank of America’s Epstein. “So what do you do to not only retain them but attract them? In the event that they really need a pension, possibly that offers you a competitive advantage over people who find themselves attempting to attract talent.”
